interest rate swap mis selling

Interest Rate Swap Mis-selling Background Interest rate swaps were actively marketed by retail banks to their small and medium sized business customers from around 2005 to 2007 and proved extremely profitable for the banks. Businesses were pressured and/or forced to believe they had no other option by their Banks to enter into interest rate swaps, sometimes as a condition precedent in loan agreements. These products were sold as the ideal protection product guarding against interest rate rises and the financial difficulties a rise could have on a small/medium sized business. Interest rates however fell to record lows from late 2008 onwards leaving clients paying for an unsuitable product and suffering in the vast majority of instances, irretrievable financial consequences of the swap itself. There is clear evidence that interest rate swaps were mis-sold by well known high street banks to small and medium enterprises. Stellar Law act for clients mis-sold ‘swaps’ and pursue those lenders in order to resolve the financial impact it has had on our clients of such mis-selling. We act for clients that were mis-sold various types of swaps including LIBOR swaps, Base rate swaps, Interest rate caps and Base rate collars swaps. Banks have a duty of care to ensure when selling financial products that they provide a full explanation of the effects and potential risks of the product. This duty of care is even more relevant with the type and/or class of the customer. Lenders are required to make sure the product is suitable for the client. The banks are obliged to follow these principles and rules as stated by the Financial Services Authority which are set out in the Conduct of Business Sourcebook (COBS). In many of these sales, the banks breached this duty of care by: (i) not explaining to their customers the possible detrimental effects of the interest rate swap and the associated risks together with (ii) failing to consider that an interest rate swap may well not be the most suitable product for their client. If you believe you have been mis-sold a ‘swap’ there are a number of options, including negotiating with the bank, making a formal complaint to the Financial Ombudsman Service (FOS) and issuing proceedings and litigation against the bank. We are not a claims management company, therefore our remit allows us to not only complain to the FOS, but also issue legal claims and represent our clients at Court. The initial step would be to attempt to negotiate with the bank and reach an agreement on the loan and repayments. We’ll consider the facts of your case before preparing a detailed pre-action letter of claim to start off the negotiations with the bank. If the bank is not prepared to negotiate then litigation will be considered to take matters further on your behalf. We’ll consider the most appropriate strategy in which to recover your losses whether that’s direct litigation or making a formal complaint to the Financial Ombudsman Service which can obtain compensation of up to £150,000. Swaps are a complex subject which most lawyers will not be familiar with or understand to a level adequate enough to recognize Interest Rate Swap mis-selling claim. We specialize in this field and have vast experience in both financial services regulatory auditing and in litigation against banks.

Interest Rate Swap Claim

Interest Rate Swap Claim Did you know you may have been mis-sold your interest rate swap which means you could have an interest rate swap claim and therefore receive compensation? It is understandable that in order to survive in the modern world you need secure finance for your business. The issue is not having access to finance; the issue is having access to large amounts of finance in order to keep your business going though the hard times – and when the option arises to access finance by way of an interest rate swap then it is easy to see how quickly people’s business debt can spiral out of control. Increasing numbers of business owners are finding themselves with large amounts of business debt and finding it difficult to keep up the monthly payments. Therefore it is becoming increasingly popular for business owners to seek ways of securing finance through as many options as possible, and very often in ways that are not necessarily that straightforward and understandable. Business owners think there is no alternative but to accept the various funding methods made available to them by the financial institutions, which can often mean securing an interest rate swap with a view of locking into a reduced interest charge, however what many business owners were not told was if the Bank of England base rate dropped then the interest rate that had been secured would not and therefore leave the business owner with high repayments. It is a vicious cycle and in this current global financial crisis, business owners are no longer able to meet their minimum monthly payments. This is because they’re not aware there maybe a claim the interest rate swap was mis-sold and therefore they may be due compensation. The question many business owners ask themselves is it really possible to challenge the financial institutions on the basis the interest rate swap was mis-sold? Yes, there is. It’s possible you can challenge the interest rate swap mis-selling and in some cases you may well be entitled to compensation should the facts uncover that you were ill advised at the time. If this is proven to be the case, then the interest rate swap would be rendered unfair, meaning the lender mis-sold the interest rate swap and therefore cannot ignore the fact that you’re owed compensation and your losses – in other words, your interest rate swap may be challenged. In addition, you may be entitled to extensive compensation as you may have incurred losses as a result of having to take on more finance, incurred charges by your lender as well as charges for late payments, or exceeding your overdraft limit on your business account. You may also be eligible for compensation if you had to close your business down as a result of the higher rate of interest you have been paying when you took out your interest rate swap on your business finance. So, not only may it be possible to claim losses for the money you have lost, it may also be possible to claim back losses for having to close down your company, and also receive additional compensation for unfair charges. To find out if you have an interest rate swap claim due to financial institutions mis selling, visit www.StellarLaw.com where we will be happy to assess your issues, and identify how we can assist you in resolving these concerns as swiftly as possible. Our goal is to provide a professional interest rate swap claim service that ultimately clears your credit issues and gets you the compensation that is rightfully yours. For more information about Interest Rate Swap Claims, read our Claims Process page of how we may help you get redress.

Interest Rate Swap Mis Selling

What is interest rate swap mis selling?

There are varied and complex versions of swap products, however in their simplest form, with an interest rate swap, the customer agrees a rate of interest with their bank. If interest rates rise, the bank pays the difference. If interest rates fall the customer must pay the difference to the bank. Unfortunately many banks have not fully explained the risks or indeed the extortionate costs to exit these swaps.

In recent years High Street banks have been advising potentially inappropriate Interest Rate Swap (IRSA) products on small and medium enterprises (SME’s). These complex products carry significant risks to businesses and issues have arisen which make it clear IRSA’s have unfortunately in some cases been mis-sold which has resulted in some businesses going into administration or liquidation.

Interest rate swap agreements (known also as interest rate hedges or derivatives) were introduced to small to medium businesses from early 2000 and were sometimes conditional in the terms of the borrowing arrangement.

Businesses affected but not limited to, include:
•    Bar & Restaurants
•    Boarding kennels
•    Care Homes
•    Day Care Nurseries
•    Farmers
•    Franchise owners
•    Garden Centres
•    Hotel businesses
•    Mobile Home Parks
•    Property developers
•    Publicans
•    Shop owners

Stellar Legal believe it’s possible any business that has borrowed money in the previous ten years may have been mis-sold IRSA’s by the high street banks. Some of Britain’s biggest banks have admitted to interest rate swap mis selling and have been fined £billions accordingly and quite rightly, business borrowers may be wondering if they can make a financial claim.

- Were you warned of the high break costs associated with your IRSA?
- Was the product explained to you in full?
- Were the risks associated with an IRSA disclosed to you?
- Were you pressured into taking the product?
- Were you told you would be able to take a loan without also purchasing an IRSA?
- Have you now realised that this was in no way fit for purpose or appropriate for your company?

Other factors of consideration need to be determined before proceeding with a claim and our financial specialists and highly experienced solicitors will only proceed in the knowledge you have a chance of success, although not guaranteed, will be clearly explained giving you an informed decision to make before proceeding with a complaint to the lender. We’ll require the following details;
•    The type of business
•    The bank being contested
•    The advice given and the amount of information provided
•    The terms of the Interest Rate Swap

Rate Swap Mis-selling Compensation

If you think you have been a victim of rate swap mis-selling you can call our professional legal team for honest, professional advice. Wherever financial negligence has occurred, our solicitors will work tirelessly to get you the compensation you’re entitled to.
Often the banks have refuted the claims outright or have protracted their responses in order to trigger the time constraints set by the Financial Ombudsman Service.
In a number of circumstances, however, banks have already settled cases out of court amounting to hundreds of thousands of pounds.

How Our Service Works

Stellar Legal is here to dispute the selling of these Swap products on your behalf. Our service includes;
1.    A full review and redress service for businesses that may have been sold an unsuitable swap.
2.    Review of the sales process, the position of the business at the time of the swap and the technical details of the contract.
3.    Where the business is within the FOS jurisdiction, we will process the complaint to conclusion.
4.    If the business is outside of FOS jurisdiction, our Solicitors will litigate the claim (subject to ATE).

Our understanding and professional relationship with the Financial Services Authority (F.S.A.) as well as our in-depth understanding of Swaps, ISDA Master Agreements and Schedules not forgetting to mention our knowledge of the Financial Ombudsman Service (FOS) processes and access to ATE insurers, allow us to provide an extremely proficient service and manage your claim promptly and efficiently.
To find out if you have been a victim of interest rate swap mis selling visit www.StellarLaw.com where we will be happy to assess your issues, and identify how we can assist you in resolving these concerns as swiftly as possible.

Our goal is to provide a professional interest rate swap mis selling claim service that ultimately clears your claim issues and gets you the compensation that is rightfully yours.

To see if you may have been mis-sold an interest rate swap visit: www.StellarLaw.com

Stellar Law is a Financial Claims Company authorised and regulated by the Ministry of Justice in respect of regulated claims management activities, (Authorisation No: CRM15623).

Stellar Law. International House, 223 Regent Street, London W1B 2QD. Registered in England as a Limited Company Registration No. 06610207